There's very little thought put into a discussion on "why" PayPal froze those funds. PayPal says "based on what we've seen in the past there's a high probability that you'll collect a lot of money for an event and then not execute that event. If that happens, we PayPal will be on the hook to make those payments to those disgruntled end users. So we can either 1) Simply refuse to work with you or 2) risk share with you by keeping enough in your account so that we can reduce our exposure to those types of claims"
If you chose a business model with an elevated level of risk then you'll have extra expenses associated with that.
I really dug that email. It's encouraging that it triggered what sounds like a very real internal discussion amongst multiple people there vs being getting completely ignored.
I know I sound like a PayPal apologist - I'm not! I know there are some very real horror stories out there. It's just that they're probably one of the few payment companies that would enable this business to actually be a business and asking $20K in surety when you're _on the hook too_ isn't as mean spirited as it first appears.
This is totally fair. We knew this was something we might have to deal with given the nature of the business.
Still, things change when they then turn around and offer you a business loan. It's hard to argue that they need to freeze your funds for collateral when they then deem you credible enough to lend you money.
It's not so much that our accounts got frozen that makes this interesting. It's the fact that they froze our accounts and then offered us a loan.
Why would PayPal be on the block when the merchant doesn't deliver? The merchant should be on the block. PayPal should just be payment infrastructure. The fact that PayPal pretends to be the merchant, at the same time pretends to represent the customer in a way the customer never asked for, and undermines the payment between the real customer and the real merchant, makes PayPal unreliable as payment infrastructure.
PayPal has a history of denying people access to their money, and I'd certainly never allow any of my money in the hands of PayPal. They operate as thugs. They take money they're not entitled to, make commercial transactions unreliable, and endanger the companies' ability to provide the services that customers paid for. PayPal is the biggest source of risk here.
If this is true, shouldn't Paypal give you the option to receive your $20,000 back and then quit using Paypal? Or perhaps be a bit more explicit with this up front (_before_ they froze your account)?
The problem with most people's complaints seems to be that PayPal doesn't look at your business and say they'll need a $20K surety. They just seem say nothing and then grab the money without warning, leaving people to scramble for cash. If they made a deal in advance it would be much more civilized.
I'm just starting to need a real solution for taking regular payments and Paypal didn't even cross my mind as a serious contender. The business model they've cultivated engenders similar levels of trust to car salesmen and the people who charge lost equipment fees at Comcast.
I'm looking at Paysimple for their integrated invoicing and transaction handling but I'd love to hear what other people use.
I used to help run a rather large fan convention. For our first 5 years (starting in about late 2003 or so), PayPal was the only option we offered for registering online. At the time, they were really the only option for implementing online payments easily without the complexity of a full merchant stack (and it was just me doing the programming, volunteering to help them while I was still in college).
By the time we finally switched away from them, we were probably clearing $60k or so a year through them, with a very large percentage of that coming over the course of a week or so just before the event. People like to wait until the last minute. :)
We never had any issues, but we were very vigilant about transferring funds out of PayPal every few days just in case. We did finally stop using them, probably about 2009 or 2010, when stories like OP's started to become widespread.
For us, having them "hold" our funds for 6 months would have bankrupted us. The hotel wants to be paid on Monday after the event. Vendors need to be paid within 30 days. Things like that would have been impossible for us to do if they decided to sit on the money. We were a volunteer fan convention; we didn't have the financial cushion to withstand something like that.
Not to mention the fees were higher than a standard merchant account. We finally did switch to a merchant account through Elavon and, after I left, I think they switched to Stripe. Either way, they don't accept PayPal now because the financial risk to them that could result from PayPal freezing the funds is significant.
The last project I worked on required integrating with clients' existing payment infrastructure, including merchant accounts, and processing their customers' payments for them in addition to billing them a small monthly fee (we didn't take any piece of customer payments). We used Chargify. It was pricey, I think about $120/mo to support ACH for a few hundred clients, but the API is solid and well-documented. They've got several employees whose job it is to work on the official libraries, as well.
I am no longer a Chargify customer because that project never really panned out. I don't have any official relationship with them.
I'm working at a startup that processes millions of dollars per month in payments. If you don't offer PayPal, you're shooting yourself in the foot. In many countries, PayPal is the defacto way people conduct online transactions. As much love as Stripe gets because of how developer friendly it is, in the real world people use what they know. And what they know is PayPal. I don't see a compelling reason not to offer it as an option.
I do some work with a non-profit. We use paypal to collect fees/dues from our about 400 members. It works fine. In the 7 years we've been using them we've yet to experience any problems. We aren't high volume.
I think the internet echo chamber makes Paypal seem out to be really bad, when the truth is all payment processors have their bad days.
People have heard of paypal and trust them. We had a few questions about it when we started (Do you really get the money if I use paypal).
Is PayPal still around simply because, as one of the earliest and one of the biggest payment facilitators on the Internet, it's become ubiquitous enough to not have to worry about being displaced? I cannot for the life of me understand how it's still a thing since every week there's yet another story of "PayPay did Shady Thing that a bank couldn't do and now I have no money and no way to get my money back."
Why is PayPal not dead? In all my research I have never been able to come up with a good answer to that question.
[edited to add] Aside from consumer ignorance of other options, that is.
We've been using PayPal for over 10 years. High volume. No complaints. Their dispute resolution service is better than others we've tried in the past (Braintree, BluePay). Fees are solid. Customer support team are pretty on top of things (if you feel like picking up a phone).
Seems like people like to pick on PayPal because they want to see the new 'startups' win. But PayPal doesn't have to lose for them to win.
To expand. We thought about switching to Stripe once. Implementation was fairly annoying compared to PayPal's which was surprising considering how loved they are by the dev community. Their fees were much higher. Support couldn't answer some relatively easy questions. Stupid turnaround time for bank deposits.
I can understand how getting setup with a Stripe branded payment form is easy and saves some hassle for a new project. But as an established business they don't bring much to the table. We passed and skipped the obligatory 'X Sucks Because Y' article.
Because of market saturation.
Stripe just recently started an open beta here in Germany. There is Skrill but besides it being relatively unknown, they implemented fees for accounts unused for > 12 months and have generally more fees than paypal (for the consumer)
And because of their consumer focus.
I have read many stories about paypal and how their actions made many problems… for businesses. I don't see stories about them fucking over consumers, quite the opposite, they try to err on the side of them.
At least that's my opinion. I probably wouldn't use PayPal should I ever start a business needing a payment processor, but as a consumer? It's awesome.
I'd switch to square, but since I don't have a debit card I can't use it. I can still use paypal (and annoy my friends in the process.)
EDIT:
To answer your question, paypal still exists for the same reasons banks exist when people hate them, and for similar reasons to why you'd hire a tour company or local guide when visiting a different country. They are embedded -- they offer increased access via established agreements with more financial entities. They have more mastery of the regulatory landscape than their competitors (especially startups).
Finance is in many ways very traditional business, and paypal has invested in traditional parts of business. I'd bet they employ more lawyers than any other payment startup out there, for example.
I use PP for my business. It has been 100% foolproof (survivor bias caveat applies). I have not found another service that does not require me to write code beyond basic html, or to maintain a website.
I am aware of horror stories, and remain interested in alternatives.
Why is PayPal not dead? My guess is that it works well enough for most people. Gamble that you won't be the one to get your account frozen, and you might be okay. And I guess a lot of companies aren't aware of the risk of doing business with PayPal.
But PayPal exists primarily because there's no reliable international internet payment infrastructure that allows direct payment from one real bank account to the other. We've for a system for that in Netherland, and every Dutch webshop uses it, but works only for payments within the country. We need something like that on an international scale.
This is not surprising to me at all, nor do I see anything nefarious in this. PayPal operates two different business units, a payments processing business and a commercial loan business. Both operate on separate P&L's, and with different risk requirements.
Let's consider two different situations:
1. PayPal's payments processing group worries about the risk of your account, and thinks about applying a hold on your funds. Just before doing so, they call the loans group, who says that they'd be perfectly happy to give you a loan for the amount of the hold, you're good for it. So, Paypal as a whole decides not to place a hold.
2. Paypal's payment processing department worries about the risk of your account, so they place a hold on your deposits. In parallel, the loan department decides you're a good credit risk, and so you apply for and receive a loan for the same amount as the hold.
In case 1, if those payments do indeed get charged back, Paypal is forced to try to come after you for the balance. Unfortunately, this debt won't have very strong legal standing, because it's not backed by a loan agreement. They might or might not get their money back. It also puts them in the position of having to chase you for the money.
In case 2, if the payments get charged back, Paypal is sitting on the funds already, and can just claim them. This might cause you to default on the loan, but that's your problem now, not PayPal's. They are also making interest on the amount of the loan.
It's pretty clear that Case 2 is MUCH better for PayPal, and only marginally worse for you, assuming that you are right about the payments all being good -- you are only out the interest cost on the money. What you seem to be arguing is that PayPal should be "nice" to you and go with Case 1.
The other fact that you might be missing is that nearly all traditional payment processors would require some kind of reserve account in situations like this, and even if they weren't holding the money, they require that they have withdrawal privileges on the account into which the funds deposit so that they can claw back money if needed. PayPal is by no means unusual or abusive in holding funds, it just seems that way because they don't pitch this as part of their up-front marketing.
Well-put. A parallel here is the pre-approvals for credit cards that people receive in the mail. It's not uncommon for a person to get those who is regularly turned down by offers or even in collections. There's just some algorithm or set of criteria by a certain company that says "send the offer" while others with different information or criteria would refuse it. Simple as that most of the time.
> This might cause you to default on the loan, but that's your problem now, not PayPal's.
Of course it's their problem. Instead of having $20,000 they have an IOU which may or may not ever be paid. Case 2 is exactly the same as Case 1 except for the extra interest which presumably covers the default risk.
It would be a better customer experience to just straight-up charge extra fees for creditworthy customers with high chargeback risk instead of this Rube Goldberg setup which is logically equivalent.
It's bizarre that it's apparently less risky for PayPal to explicitly take on risk by providing a loan, than to let people have access to their own money that was never intended for PayPal in the first place.
I consider scenario 2 a case of PayPal stealing your money and loaning it back to you against interest. It should be illegal. The fact that this is legal is baffling to me.
But it seems like US law offers some perverse incentives for payment providers.
The OP of this story was collecting money in the U.S. for events and lodging that had not yet happened in third world countries, and presumably was remitting a healthy amount of money from those transactions to multiple small accounts in said third world countries.
Their business was brand new and had no extensive transaction history with Paypal or anyone else. The customers providing the funds in question were most likely paying with credit cards and would be able to charge back the funds if the events didn't take place or were unsatisfactory.
I find it impressive that Paypal was willing to work with them at all given the above fact pattern. Many, many payment processors simply wouldn't be usable at all.
I have a small side business that does < $1000 a month in PayPal transactions, but I regularly withdraw money from my PayPal account to my bank account specifically because I don't trust leaving my money in PayPal.
Why don't larger business do more frequent withdrawals from PayPal to a proper bank?
The fraud department at PayPal has to exercise a large amount of caution because if they make a mistake they lose more money.
The lending department at PayPal can be more opportunistic because they can potentially turn a profit with a successful loan.
I'm not saying that either of those actual departments are correct or that their decisions are sound, but even at a perfectly run organization wouldn't this paradox be somewhat present?
Friends who do a lot of Ebay transactions have always recommended getting a dedicated checking account for Paypal, and then setting up regular transfers out the account, so that one's ability to pay bills and vendors will not be impacted by a Paypal issue.
Why use PayPal for credit card payment processing above the petty cash level? If you're up to $30K, you should be getting merchant services from a real bank, not an intermediary. If you're not using eBay, PayPal provides few benefits.
I've avoided having to trust PayPal with any sum of money since I first heard of their freezing practices years ago. Back then (not sure if this has changed) they weren't regulated like a bank so they could get away with some pretty shady behaviors.
I always suspected that they were taking the collateral and making short-term investments, this is the first time I've ever seen them try to do both with the same company at the same time...
Speaking from a nightmarish personal experience moving hundreds of thousands with PayPal over the years, it is astounding to me that it took so long for someone like Stripe to come along.
It is not astounding they have quickly blossomed into a valuable company.
Why did it take so long?
And what about eBay? Someone should consider taking that on.
Letting a huge business being an incumbent without competition for 15+ years in the web world seems so absurd.
My understanding is there are epic regulatory and bureaucratic blocks involved in setting up international payment services - ironic given PP's reputation, but so it goes.
I am in a position to hear a lot of comments on Paypal from freelance artists, and I often hear of them freezing someone's account over some transaction or for no expressed reason at all. I often wonder how they can get away with this, I would imagine if a bank did this they would be in hot water quickly with a regulator. It all seems a bit shady.
Nice of them to loan you your money with interest... if they were an honest company, maybe they'd offer to use the business LOC as collateral and free up your funds, dipping into the credit should the risk become real and your funds get charged back...
Generally good advice when considering PayPal is to recite to yourself "PayPal is not a bank, PayPal is not a bank, ..."
But they do like money, and they like to move it around creatively and create ways to use other people's money to make money for them.
One of the reasons they aren't a bank is they don't do (and are not allowed to do AFAICT) fractional reserve lending. In that sort of scenario this story makes a lot of sense, you freeze(or seize) assets from your customers, and then loan them out to other customers who pay you interest on repaying that loan, and if they default you presumably keep the other customer's money to cover that "loss". Sort of 100% reserve banking.
Do you have any evidence that freezing funds is related to lending? Because that's a pretty massive claim, particularly since they are supposedly two completely separate business units on separate budgets and P&Ls (fraud prevention and lending).
This is frustrating, but not necessarily a conflict of interest.
Any type of events business carries a significant risk to a payment processor. Funds are paid up front before services are delivered. If the event doesn't happen there will be a demand for refunds.
This isn't necessarily due to malfeasance on the part of the promoter. Imagine there was a conference booked in the World Trade Center for September 12th.
Boil it all down and what PayPal is doing is charging a higher percentage fee (aka the base fees plus the interest on the loan) for a business they deem to be more risky. Entirely fair.
Now for the way they presented those fees - absolutely unacceptable customer service.
To clarify the comment about refunds. Participants would first go to the promoter. But if they were unable to resolve the dispute, they could then go to their bank and dispute the charge. My understanding of this is murky, but in the end PayPal does carry a liability for those funds as a participant in the transaction.
Think OP is assuming Paypal has departments that understand how eachothers decisions affect the other, PP is a huge company and I doubt malice was actually intended, but nonetheless pointing it out to them was necessary.
regardless of what division is making the determination, either the company is risky or they're not. charging them interest to access the money that is rightfully theirs is extortion, plain and simple
I am considering on using Paypal in my startup business. How do you feel about it? I attended a startup conference 6 months ago. Paypal was also there claiming that there will be solutions for startup business. I don't know if this is a special case. How can I avoid my capital from being frozen? Singing "Let it go"?
Will you have delivered the product/service at issue at the time you charge the card or within a short period of time thereafter? If so, it is highly likely you will not have any issue with Paypal. If you are accepting pre-payment for something which cannot be delivered in full shortly after payment, it is likely that you'll have to become conversant with Paypal's published guidelines about this.
Spoiler alert: if you are in an events business, "We emailed a ticket" does not constitute delivery of the purchase. Successful conclusion of the event constitutes delivery. Most events businesses structurally need to pre-sell tickets. They will, virtually inevitably, have more issues with collecting payments than e.g. a software company which says "You give us a credit card we give you a working download link." This is not a result of caprice by Paypal -- more than 1% of scheduled events fail to actually happen; when that happens, Paypal gets hit with hundreds of chargebacks.
[+] [-] jusben1369|10 years ago|reply
If you chose a business model with an elevated level of risk then you'll have extra expenses associated with that.
I really dug that email. It's encouraging that it triggered what sounds like a very real internal discussion amongst multiple people there vs being getting completely ignored.
I know I sound like a PayPal apologist - I'm not! I know there are some very real horror stories out there. It's just that they're probably one of the few payment companies that would enable this business to actually be a business and asking $20K in surety when you're _on the hook too_ isn't as mean spirited as it first appears.
[+] [-] caser|10 years ago|reply
Still, things change when they then turn around and offer you a business loan. It's hard to argue that they need to freeze your funds for collateral when they then deem you credible enough to lend you money.
It's not so much that our accounts got frozen that makes this interesting. It's the fact that they froze our accounts and then offered us a loan.
[+] [-] smt88|10 years ago|reply
That creates an enormous conflict of interest for the people at PayPal who decide when to freeze/unfreeze an account.
[+] [-] mcv|10 years ago|reply
PayPal has a history of denying people access to their money, and I'd certainly never allow any of my money in the hands of PayPal. They operate as thugs. They take money they're not entitled to, make commercial transactions unreliable, and endanger the companies' ability to provide the services that customers paid for. PayPal is the biggest source of risk here.
[+] [-] aftbit|10 years ago|reply
[+] [-] tim333|10 years ago|reply
[+] [-] WalterBright|10 years ago|reply
[+] [-] quasse|10 years ago|reply
I'm looking at Paysimple for their integrated invoicing and transaction handling but I'd love to hear what other people use.
[+] [-] peckrob|10 years ago|reply
By the time we finally switched away from them, we were probably clearing $60k or so a year through them, with a very large percentage of that coming over the course of a week or so just before the event. People like to wait until the last minute. :)
We never had any issues, but we were very vigilant about transferring funds out of PayPal every few days just in case. We did finally stop using them, probably about 2009 or 2010, when stories like OP's started to become widespread.
For us, having them "hold" our funds for 6 months would have bankrupted us. The hotel wants to be paid on Monday after the event. Vendors need to be paid within 30 days. Things like that would have been impossible for us to do if they decided to sit on the money. We were a volunteer fan convention; we didn't have the financial cushion to withstand something like that.
Not to mention the fees were higher than a standard merchant account. We finally did switch to a merchant account through Elavon and, after I left, I think they switched to Stripe. Either way, they don't accept PayPal now because the financial risk to them that could result from PayPal freezing the funds is significant.
[+] [-] pc86|10 years ago|reply
I am no longer a Chargify customer because that project never really panned out. I don't have any official relationship with them.
[+] [-] skylark|10 years ago|reply
[+] [-] acomjean|10 years ago|reply
I think the internet echo chamber makes Paypal seem out to be really bad, when the truth is all payment processors have their bad days.
People have heard of paypal and trust them. We had a few questions about it when we started (Do you really get the money if I use paypal).
[+] [-] sageabilly|10 years ago|reply
Why is PayPal not dead? In all my research I have never been able to come up with a good answer to that question.
[edited to add] Aside from consumer ignorance of other options, that is.
[+] [-] omfg|10 years ago|reply
Seems like people like to pick on PayPal because they want to see the new 'startups' win. But PayPal doesn't have to lose for them to win.
To expand. We thought about switching to Stripe once. Implementation was fairly annoying compared to PayPal's which was surprising considering how loved they are by the dev community. Their fees were much higher. Support couldn't answer some relatively easy questions. Stupid turnaround time for bank deposits.
I can understand how getting setup with a Stripe branded payment form is easy and saves some hassle for a new project. But as an established business they don't bring much to the table. We passed and skipped the obligatory 'X Sucks Because Y' article.
[+] [-] Semaphor|10 years ago|reply
Because of market saturation. Stripe just recently started an open beta here in Germany. There is Skrill but besides it being relatively unknown, they implemented fees for accounts unused for > 12 months and have generally more fees than paypal (for the consumer)
And because of their consumer focus. I have read many stories about paypal and how their actions made many problems… for businesses. I don't see stories about them fucking over consumers, quite the opposite, they try to err on the side of them.
At least that's my opinion. I probably wouldn't use PayPal should I ever start a business needing a payment processor, but as a consumer? It's awesome.
[+] [-] oxryly1|10 years ago|reply
EDIT:
To answer your question, paypal still exists for the same reasons banks exist when people hate them, and for similar reasons to why you'd hire a tour company or local guide when visiting a different country. They are embedded -- they offer increased access via established agreements with more financial entities. They have more mastery of the regulatory landscape than their competitors (especially startups).
Finance is in many ways very traditional business, and paypal has invested in traditional parts of business. I'd bet they employ more lawyers than any other payment startup out there, for example.
[+] [-] analog31|10 years ago|reply
I am aware of horror stories, and remain interested in alternatives.
[+] [-] mcv|10 years ago|reply
But PayPal exists primarily because there's no reliable international internet payment infrastructure that allows direct payment from one real bank account to the other. We've for a system for that in Netherland, and every Dutch webshop uses it, but works only for payments within the country. We need something like that on an international scale.
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] URSpider94|10 years ago|reply
Let's consider two different situations:
1. PayPal's payments processing group worries about the risk of your account, and thinks about applying a hold on your funds. Just before doing so, they call the loans group, who says that they'd be perfectly happy to give you a loan for the amount of the hold, you're good for it. So, Paypal as a whole decides not to place a hold.
2. Paypal's payment processing department worries about the risk of your account, so they place a hold on your deposits. In parallel, the loan department decides you're a good credit risk, and so you apply for and receive a loan for the same amount as the hold.
In case 1, if those payments do indeed get charged back, Paypal is forced to try to come after you for the balance. Unfortunately, this debt won't have very strong legal standing, because it's not backed by a loan agreement. They might or might not get their money back. It also puts them in the position of having to chase you for the money.
In case 2, if the payments get charged back, Paypal is sitting on the funds already, and can just claim them. This might cause you to default on the loan, but that's your problem now, not PayPal's. They are also making interest on the amount of the loan.
It's pretty clear that Case 2 is MUCH better for PayPal, and only marginally worse for you, assuming that you are right about the payments all being good -- you are only out the interest cost on the money. What you seem to be arguing is that PayPal should be "nice" to you and go with Case 1.
The other fact that you might be missing is that nearly all traditional payment processors would require some kind of reserve account in situations like this, and even if they weren't holding the money, they require that they have withdrawal privileges on the account into which the funds deposit so that they can claw back money if needed. PayPal is by no means unusual or abusive in holding funds, it just seems that way because they don't pitch this as part of their up-front marketing.
[+] [-] nickpsecurity|10 years ago|reply
[+] [-] scotty79|10 years ago|reply
Only as nefarious as locking random person that came to your door in your basement then offering h(er|im) your company because (s|)he might be lonely.
[+] [-] aianus|10 years ago|reply
Of course it's their problem. Instead of having $20,000 they have an IOU which may or may not ever be paid. Case 2 is exactly the same as Case 1 except for the extra interest which presumably covers the default risk.
It would be a better customer experience to just straight-up charge extra fees for creditworthy customers with high chargeback risk instead of this Rube Goldberg setup which is logically equivalent.
[+] [-] mcv|10 years ago|reply
I consider scenario 2 a case of PayPal stealing your money and loaning it back to you against interest. It should be illegal. The fact that this is legal is baffling to me.
But it seems like US law offers some perverse incentives for payment providers.
[+] [-] robryan|10 years ago|reply
[+] [-] CPLX|10 years ago|reply
Their business was brand new and had no extensive transaction history with Paypal or anyone else. The customers providing the funds in question were most likely paying with credit cards and would be able to charge back the funds if the events didn't take place or were unsatisfactory.
I find it impressive that Paypal was willing to work with them at all given the above fact pattern. Many, many payment processors simply wouldn't be usable at all.
[+] [-] Osiris|10 years ago|reply
Why don't larger business do more frequent withdrawals from PayPal to a proper bank?
[+] [-] maxmcd|10 years ago|reply
The lending department at PayPal can be more opportunistic because they can potentially turn a profit with a successful loan.
I'm not saying that either of those actual departments are correct or that their decisions are sound, but even at a perfectly run organization wouldn't this paradox be somewhat present?
[+] [-] akeck|10 years ago|reply
[+] [-] Animats|10 years ago|reply
[+] [-] iaw|10 years ago|reply
I always suspected that they were taking the collateral and making short-term investments, this is the first time I've ever seen them try to do both with the same company at the same time...
[+] [-] ErikAugust|10 years ago|reply
It is not astounding they have quickly blossomed into a valuable company.
Why did it take so long?
And what about eBay? Someone should consider taking that on.
Letting a huge business being an incumbent without competition for 15+ years in the web world seems so absurd.
[+] [-] TheOtherHobbes|10 years ago|reply
[+] [-] kayfox|10 years ago|reply
[+] [-] jadoti|10 years ago|reply
... if they were an honest company ...
[+] [-] ChuckMcM|10 years ago|reply
But they do like money, and they like to move it around creatively and create ways to use other people's money to make money for them.
One of the reasons they aren't a bank is they don't do (and are not allowed to do AFAICT) fractional reserve lending. In that sort of scenario this story makes a lot of sense, you freeze(or seize) assets from your customers, and then loan them out to other customers who pay you interest on repaying that loan, and if they default you presumably keep the other customer's money to cover that "loss". Sort of 100% reserve banking.
[+] [-] pc86|10 years ago|reply
[+] [-] patsplat|10 years ago|reply
Any type of events business carries a significant risk to a payment processor. Funds are paid up front before services are delivered. If the event doesn't happen there will be a demand for refunds.
This isn't necessarily due to malfeasance on the part of the promoter. Imagine there was a conference booked in the World Trade Center for September 12th.
Boil it all down and what PayPal is doing is charging a higher percentage fee (aka the base fees plus the interest on the loan) for a business they deem to be more risky. Entirely fair.
Now for the way they presented those fees - absolutely unacceptable customer service.
[+] [-] patsplat|10 years ago|reply
[+] [-] jamisteven|10 years ago|reply
[+] [-] nqzero|10 years ago|reply
[+] [-] shorsusan1|10 years ago|reply
[+] [-] patio11|10 years ago|reply
Spoiler alert: if you are in an events business, "We emailed a ticket" does not constitute delivery of the purchase. Successful conclusion of the event constitutes delivery. Most events businesses structurally need to pre-sell tickets. They will, virtually inevitably, have more issues with collecting payments than e.g. a software company which says "You give us a credit card we give you a working download link." This is not a result of caprice by Paypal -- more than 1% of scheduled events fail to actually happen; when that happens, Paypal gets hit with hundreds of chargebacks.
More details: https://www.paypal.com/webapps/mpp/brc/presale-policy-and-re...
Events businesses: https://www.paypal.com/webapps/mpp/brc/account-reserves-tick...
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] a3n|10 years ago|reply
I would think just about any new business is some flavor of "risky." I don't see why any new business would use paypal knowing that.